Vancouver will have a levy on empty homes in time for the 2017 tax season, and neighbours will be leaned on to help enforce it, Mayor Gregor Robertson and city staff told reporters today.

The annual tax will apply to anyone who self-declares an empty home on their tax bill and it will likely be 0.5 to two per cent of the home’s assessed value, according to a staff report prepared in advance of a council vote on the matter next week.

The empty homes tax would be a first in Canada and comes amid a near-zero rental vacancy rate in the city and on the heels of a city-commissioned study that claimed to have found 10,800 homes sitting empty year-round.

“This empty homes tax is first and foremost about bringing rental homes back onto the market,” Robertson said.

Staff plan to rely on a snitch-and-audit system to make sure homeowners comply with the tax. With Vancouver homes selling at an average of $1.1 million apiece, a two per cent amounts to $22,000, or $1,835 per month. That’s far less than such a home would generate in monthly rent, but the levy is hefty enough that some homeowners may try to dodge it.

Kathleen Llewellyn-Thomas, the city’s general manager of community services, explained how the city plans to catch those that do.

The city would require homeowners to declare whether their Vancouver home was their “principal residence” using a definition similar to that in the B.C. Home Owner Grant. Such residences that are regularly occupied, or secondary homes lived in by tenants or family members would be exempt from the tax.

Staff would then perform random and snitch-driven audits to sniff out homeowners who had not been truthful. Auditors would request things like drivers’ licences, health cards and documents from the Canada Revenue Agency for proof of principal residency — proof that the city can now legally demand given recent changes to the Vancouver Charter, Llewellyn-Thomas noted.

When asked if she really thought people would self-declare an empty home, Llewellyn-Thomas said: “It’s the same as the income tax process. That’s the basis of our tax system here in Canada and so the audit process and the complaints process will keep people honest.”

When people are found not to have been honest, they will be hit with a penalty. What that penalty will be is yet to be decided.

Also yet to be determined is who, precisely, will be exempted from the tax. It’s one of the biggest questions residents who find themselves away from their homes for months at a time will have about the tax, and it’s one that staff don’t have the answer to. Robertson was quick to say very few Vancouver residents would be subject to the tax, but staff plan to consult residents this fall on how far reaching it should be.

“We understand that there are lots of different reasons why people have left their homes empty,” Llewellyn-Thomas said.

“We will be testing various scenarios and asking the public to bring us scenarios as well.”

Kathleen Llewellyn-Thomas, the City of Vancouverâs general manager of community services, addresses the media on Wednesday morning about the proposed empty homes tax.NICK PROCAYLO /
PNG

Among the exemptions staff have proposed for discussion so far include homes that are:

• In probate or whose owner or tenant is in care;

• Subject to rental restrictions;

• Undergoing major renovations.

Empty laneway houses or basement suites would not be taxed as long as at least one unit on the same parcel of land is occupied, according to the report. But as to whether a home that is empty for six months a year should be treated like one that’s empty for nine? Staff don’t know that yet either.

The most obvious homes that city staff want to tax are those that are empty year-round, year after year. When asked whether Vancouver residents could afford to rent the kinds of houses and condos whose owners can afford to keep them perpetually empty, Llewellyn-Thomas said staff expect “when the supply of rental accommodation increases, the price and the supply and demand will find an equilibrium.”

At least $2 million in revenue would be generated from the tax annually and that would be enough to cover the costs of administering it, Robertson estimated. Any revenue earned above expenses would go to affordable housing, he said.

Robertson was quick to caution that the tax “is not a silver bullet” that would lift the vacancy rate on its own, but “an important tool to start the shift.” He expected many to rent their homes rather than pay the tax.

“Some people who can afford it will not want to rent out their property, and therefore, they’re going to make a generous contribution to affordable housing in Vancouver,” he said.

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